SHARES in PetroNeft collapsed yesterday after the oil and gas explorer almost halved its production target for the first quarter of next year.

The company, which has focused its exploration in Siberia in Russia, saw its shareprice fall nearly 27pc at one point before recovering to close down 23.26pc at 33 cent.

In an operations update to coincide with its AGM, the company said it had revised down its Q1 2012 production target to between 4,000 and 5,000 barrels of oil per day (bopd) compared to a previous target of between 7,000 and 8,000 bopd. Production targets for 2013 have also been cut, to between 7,000 and 9,000 bopd.

The reduction came after the company found that the "Pad 3" site in the western part of its Lineynoye oil field in Russia had been found to be "lower structurally" than the rest of the field and had thinner pays.

That discovery has prompted a change in drilling strategy that will see further concentration in the "Pad 2" sector of the field and fewer wells available for production than the company had planned originally.

Current production is estimated at 2,500 bopd.

PetroNeft chief executive Dennis Francis said that despite the setback, he remained confident in the company's assets for the long term.

"While the Pad 3 drilling results will limit near-term production growth, we remain confident in the longer term reserve and production potential of our licences," he said.

Goodbody stockbrokers' Gerry Hennigan said the revised estimates were "more in line" with Goodbody's own estimates, but full-year 2012 production forecasts still looked "a little on the high side".

Davy's Job Langbroek said the reduction was disappointing but extra drilling on Pad 2 would in time "compensate for the shortfall in production".